How can AI transform customer onboarding?

The role of artificial intelligence is continuing to evolve within the FinTech sector. As firms get to grips with the technology’s potential, many stakeholders are attempting to figure out what comes next. 

One particular area that is ripe for disruption is customer onboarding. A practice that can at times be slow, arduous and burdensome, the opportunities for AI within the area of customer onboarding could be huge. How can the industry grasp this opportunity?

Ted Datta, senior director, head of financial crime compliance practice, Europe, Africa & Americas at Moody’s, believes that AI has the potential many aspects of the customer onboarding process by automating tasks like document and identity verification and customer communication.

He said, “Moody’s leverages machine learning to reduce false positives during onboarding, while using deep learning to make sure negative news screening is more relevant. This automation enables processes to be completed efficiently with a significant reduction in errors, allowing compliance professionals to focus on more complex tasks where their insight is of greater value.”

Despite this, Datta explained that this potential is yet to be felt uniformly across sectors. A recent study by Moody’s found that the adoption of AI in KYC processes is still growing, with FinTech currently leading the way at 18% and banking at 12%.

“We’re still in the early stages of its use, but compliance professionals expect AI to be transformative, suggesting wider adoption in the future and more revolutionary impacts beyond the automation of processes for onboarding,” said Datta.

Greater efficiencies 

In the view of Laura Hadfield, anti-money laundering SME at Qkvin, AI can be utilised to create a more automated journey and user-friendly interfaces, with faster verification, enhancing a customer’s onboarding experience.

“This also enables customers for whom traditional document-based verification creates a barrier, an alternative method to onboarding,” said Hadfield. “As AI gets integrated into onboarding journeys, confidence has grown in the security and effectiveness of remote customer onboarding. This has allowed businesses to move away from the time-intensive in-person onboarding experience, freeing up their staff for more complex tasks.”

Hadfield also believes that GenAI can assist in the onboarding journey, from document verification all the way through to diving into details behind risk profiles of customers.

“GenAI also serves as an educational tool for new members of compliance staff to get assistance wherever they need it. This assists FinCrime Investigators in their decisioning process and helps to ensure regulatory compliance. As AI continues to evolve, we can expect the onboarding journey for both customer and staff to evolve in tandem,” said Hadfield.

Onboarding revolution 

One of the key watchwords surrounding Generative AI is efficiency. With the technology’s ability to save time and effort for companies to focus more on innovation and less on drudgery, many firms are considering how Gen AI can help them become more efficent.

Flagright growth manager Joseph Ibitola said, “The introduction of Generative AI is revolutionizing the way businesses onboard their customers. AI’s ability to analyze vast amounts of data enables companies to personalize the onboarding experience for each customer. By understanding individual preferences and behaviors, AI can tailor the journey, making customers feel valued and understood from the very beginning.

“Efficiency is another significant benefit AI brings to the onboarding process. Automating repetitive tasks such as data entry and document verification not only speeds up the process but also minimizes errors. This should allow customers to get through onboarding more quickly and smoothly, enhancing their overall experience.”

Ibitola explained that predictive analytics is also one of AI’s most powerful features. Through the analysis of historical data, AI is able to predict potential issues or drop-off points in the onboarding process – enabling firms to address problems before they escalate.

He added, “Moreover, AI systems continuously learn and improve from each interaction. By constantly analyzing onboarding data and customer feedback, AI can identify areas for improvement and suggest enhancements. This continuous feedback loop helps companies stay agile and responsive to customer needs, consistently optimizing the onboarding process.

“In essence, AI transforms customer onboarding by making it faster, smarter, and more personalized. Embracing AI is not just about leveraging technology; it’s about creating a superior, more efficient experience for every new customer. This forward-thinking approach positions companies to better meet customer expectations and stay competitive in an ever-evolving market.”

Managing challenges 

According to Eric Frost, CEO and co-founder of Simple KYC, said that faced with an ever increasing digital landscape, lenders and financiers are being called upon to balance their customer due diligence compliance obligations with demands for ever simpler and quicker customer onboarding experiences.

He added, “Participants that do not embrace the adoption of new technologies like GenAI to their fullest extent run the risk that prospective customers will seek out other market participants that are simply much easier to deal with. It is in this context that it is becoming evident that customer due diligence compliance solutions that are optimised via the selective adoption of new technologies such as GenAI will steadily become a source of competitive advantage in their own right.